Effectuation As Ineffectual? Applying the 3E Theory-Assessment Framework to a Proposed New Theory of Entrepreneurship

Abstract

Effectuation is a proposed new theory of entrepreneurship, with insufficient empirical testing and critical analysis. Drawing on a new, comprehensive set of theory-building criteria-sourced from and complementing those of Robert Dubin and others-we provide the first formal assessment of effectuation as a theory. We highlight its strengths and weaknesses, leveraging the former to address the latter in five different directions that would build on the existing work to improve this theory. The assessment exercise also displays the value of our assessment framework in guiding the evaluation and development of other existing and future theories in entrepreneurship and management.Effectuation, as a new proposed theory of entrepreneurship (Sarasvathy, 2001), appears to be at a crossroads: many scholars consider it a viable theory while many do not. Supporters include Fisher (2012), who believes effectuation is one of the few viable alternative theoretical perspectives describing entrepreneurial action, and Coviello and Joseph (2012), who find value in effectuation as an explanation of success in new product development. Detractors include Chiles, Bluedorn, and Gupta (2007), who find effectuation under-defined and unoriginal; Baron (2009), who argues that the focal agents described in it cannot actually exist; and Perry, Chandler, and Markova (2012), who conclude that effectuation has yet to be properly tested. We believe that any proposed theory of entrepreneurship is worthy of detailed assessment, especially one that has survived over a dozen years and continues to divide its audience. Given that "an awareness of the actions and behaviors of entrepreneurs is critical to understanding an entrepreneurial economy" (Chandler, DeTienne, McKelvie, & Mumford, 2011: 375), then studies of such actions are important, and if such studies are important, then the critical analysis of any new conceptualizations of such actions-like effectuation-is also important. We conduct that critical analysis based on a new, comprehensive set of theory-assessment criteria organized in an intuitive framework.We contribute to the entrepreneurship literature in two ways: (1) by providing critical analysis of effectuation as a theory and (2) by suggesting alternatives and directions for improving on and extending the effectual approach, based on our assessment as well as on recent developments in related entrepreneurship research. To that end, in this article we address the question of whether effectuation is good social science theory and, specifically, whether it is good entrepreneurship ! 1 theory. By providing a formal assessment of this proposed entrepreneurship theory, we define a clear standard for other proposed theories, of the present and future, in our field and others.Thus, a related contribution is the introduction of a new, comprehensive theory-assessment framework that is fair, objective, and applicable to any general business theory because it effectively summarizes the main criteria grounded in general normative and pragmat...

Entrepreneurs' human resources development

“…Although there are still different definitions of and perspectives on effectuation (Arend, Sarooghi, & Burkemper, ; Perry, Chandler, & Markova, ), there are five categories that characterize the effectuation construct: Effectuation is means‐orientated in that it focuses the accumulation of commitments and resources. Actions start with an analysis of the means at hand and an exploration of the possible outcomes that could be reached with those means.…”

Does effectuation apply across cultures? A study amongst entrepreneurs in Kuwait

“…Effectuation theory has not been with criticism. In a recent article by Arend et al (2015) published in the reputed Academy of Management Review, it is suggested that effectuation might be ineffectual as a new theory of entrepreneurship. The key contention is that effectuation has been subjected to insufficient empirical testing and critical analysis.…”

“…A recent controversy has cast doubts about the validity of effectuation as a theory (Arend et al, 2015), but the key supporters of the concept have responded arguing that effectuation has been validated empirically in a considerable number of studies, while also recognizing that the notion is not yet a complete body of knowledge and that further research is still required (Read et al, 2016). Eckhardt and Shane (2003, p. 336) define entrepreneurship as the "discovery, evaluation, and exploitation of future goods and services" and include in the definition the study of opportunities, defined as "situations in which new goods, services, raw materials, markets and organizing methods can be introduced through the formation of new means, ends, or means-ends relationships".…”

Effectuation and Causation as the Mediators of the Relationship between Cultural Value Orientations and New Venture Performance

“…: [Arend, Sarooghi, Burkemper, 2015;Eijdenberg, Paas, Masurel, 2015;Politis, Winborg, Dahlstrand, 2012;Smolka et al, 2016]). Эффектуация определена как ло-гика принятия решений на основе име-ющихся в распоряжении ресурсов и вы-бора из возможных результатов тех, ко-торые могут быть достигнуты с помощью этого набора ресурсов.…”

“…: [Gabrielsson, Politis, 2011;Politis, Winborg, Dahlstrand, 2012]). Так, в работе [Arend, Sarooghi, Burkemper, 2015] отмечены два основных фактора, оказывающих воздействие на формиро-вание эффектуации: высокая степень не-определенности и ограниченность ресур-сов, доступных предпринимателю. В то же время, помимо индивидуальных фак-торов, на предпринимательское мышле-ние существенное влияние могут оказы-вать факторы внешней среды.…”